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Infrastructure deployment under uncertainties and competition: The biofuel industry case

Author

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  • Wang, Xin
  • Lim, Michael K.
  • Ouyang, Yanfeng

Abstract

Technological paradigm shifts often come with a newly emerging industry that seeks a viable infrastructure deployment plan to compete against established competitors. Such phenomenon has been repeatedly seen in the field of transportation systems, such as those related to the booming bioenergy production, among others. We develop a game-theoretic modeling framework using a continuum approximation scheme to address the impacts of competition on the optimal infrastructure deployment. Furthermore, we extend the model to incorporate uncertainties in supply/demand and the risk of facility disruptions. Analytical properties of the optimal infrastructure system are obtained, based on which fast numerical solution algorithms are developed. Several hypothetical problem instances are used to illustrate the effectiveness of the proposed algorithms and to quantify the impacts of various system parameters. A large-scale biofuel industry case study for the U.S. Midwest is conducted to obtain additional managerial insights.

Suggested Citation

  • Wang, Xin & Lim, Michael K. & Ouyang, Yanfeng, 2015. "Infrastructure deployment under uncertainties and competition: The biofuel industry case," Transportation Research Part B: Methodological, Elsevier, vol. 78(C), pages 1-15.
    • Handle: RePEc:eee:transb:v:78:y:2015:i:c:p:1-15
    DOI: 10.1016/j.trb.2015.03.010
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    Cited by:

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    6. Jason Wood & James Nolan, 2021. "Plant location decisions in the ethanol industry: a dynamic and spatial analysis," Computational Economics, Springer;Society for Computational Economics, vol. 58(1), pages 103-132, June.
    7. Sykes, Pete & Bell, Margaret & Dissanayake, Dilum, 2018. "Combined use of a backcast scenario and cross-impact matrix analysis to identify causes of uncertainty in a nascent transport infrastructure project," Transportation Research Part B: Methodological, Elsevier, vol. 116(C), pages 124-140.
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    9. Salimi, F. & Vahdani, Behnam, 2018. "Designing a bio-fuel network considering links reliability and risk-pooling effect in bio-refineries," Reliability Engineering and System Safety, Elsevier, vol. 174(C), pages 96-107.
    10. An, Kun & Ouyang, Yanfeng, 2016. "Robust grain supply chain design considering post-harvest loss and harvest timing equilibrium," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 88(C), pages 110-128.

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